NEWS AND BLOG
Finding the Right Site
Where to Go
Food and beverage facilities projects pose unique challenges in terms of location considerations due to several characteristics common to the industry:
Narrow profit margins require a location that offers favorable operating costs and conditions.
Short product cycles in a highly competitive segment require a location where the project can move forward quickly.
Logistics, including access to raw materials and customers for efficient transportation and storage of products.
Food safety regulations require a location that supports clean, reliable, and secure operations.
Selecting the optimal location often requires a comprehensive and phased evaluation. Strategic issues such as the mission relative to other facilities in the network and national variations in transportation, customer service requirements, taxes, labor availability, and utility costs must often be considered in any initial investigation. A strategy study will inform the search to identify the most favorable states/regions for further consideration.
Community and site evaluations typically follow to investigate the area’s business environment, property development considerations, infrastructure, and qualitative factors. Incentives negotiation and final due diligence are generally completed once the search has been narrowed to two to three top-performing sites to determine overall financial competitiveness and confirm that the site can meet the project development requirements and schedule.
Issues that often play an important role in site selection criteria also include:
Access to highway, rail, and other transportation infrastructure. In addition, the quality of air service for upper management teams and customer access could be important.
The ability to hire employees at competitive wages in a given area is paramount. The types of skill levels required are also a significant consideration. Other factors include labor quality, local training schools and programs, competing employers, relocation appeal, labor union presence, and the general local labor environment.
Many food and beverage operations are significant water consumers. Available water quantities and services can vary significantly from one site to another. Even where product requirements do not mandate large amounts of process water, the quality and quantity of water should be carefully considered, including for fire protection. Direct access to a high-quality groundwater source may be a cost-effective solution for larger users.
Two issues are associated with sanitary sewers for food and beverage operations: 1) wastewater flow and 2) wastewater composition. Due to sanitation and other requirements, many food and beverage facilities discharge large quantities of wastewater. Therefore, it is essential to ensure that the municipal wastewater authority can handle the required wastewater flow.
Plant waste or processed water frequently contains organic matter. The presence of specific organic material makes this liquid biodegradable, which causes an increase in the biochemical oxygen demand (BOD). In addition, small, suspended particles may exist in wastewater flowing from the facility, and these particles are measured as total suspended solids (TSS). Depending on the BOD and TSS levels, many municipal plants require pre-treatment and will add a compensating surcharge to wastewater bills. These costs should be investigated and compared to other candidate locations. If possible, ensure that a municipal wastewater authority with adequate capacity to accommodate plant wastewater flow and composition services the facility. A location that can accommodate wastewater flow but not composition may require on-site pretreatment before discharging to the municipal system. For some facilities, such as animal harvest facilities, full treatment and direct discharge may be necessary or preferred.
Some locations may require an onsite retention pond to satisfy stormwater requirements. However, as a potential habitat for birds and insects, ponds should be located away from the building to limit contamination risks.
Natural gas is a desired fuel for equipment, including ovens, boilers, and drying equipment. Availability of firm natural gas service is typically preferred to minimize disruptions and maintain regular operations. In locations subject to interruptions, a backup system may be required, which can add cost.
Electric power can be a significant utility input, depending on the equipment load requirements. Load requirements are generally increasing due to increases in automation and integrated cold storage. Sites should have access to an electric utility that can meet the demand requirements and provide a clean, reliable power supply. For larger load requirements, an onsite substation may be required. The availability of clean/renewable energy is becoming increasingly important.
Zoning and Permitting
A careful review of applicable zoning and land use regulations should be completed to ensure that the project is permitted. For example, certain food processes that have external environmental impacts, such as odor, storage, and noise, may not be permitted in light industrial zones. Permitting is one of the most significant factors in many construction schedules. Therefore, it is important to understand the permitting process and schedule clearly.
Other permitting and zoning issues include:
- Wastewater treatment/testing.
- Traffic study requirements.
- EPA requirements.
- Site plan requirements.
- local health department requirements.
- Noise and emissions regulations.
- Special zoning approvals/variances.
- Soil Conditions/Topography
While location is the primary consideration in site selection, the site’s inherent characteristics will play a significant part in plant constructability. Cut and fill quantities, as well as removal of any unsuitable soils or contaminants, can have a significant impact on site preparation costs.
Soil conditions will determine the type of floor slab most appropriate for the site and the foundation needed to support it. Subsurface water conditions, conditions of previous fill, rock, and unsuitable soil that may be present will determine if the building can be constructed on standard footings or if it may require a special deep foundation system.
Community characteristics that are important to the company and the operation should be investigated. For example, does the community promote new development and growth? Does a diverse mix of industries exist? Is the community “business friendly?” Is there an adequate supply of workforce housing? Does the community have a track record of stable government leadership?
Incentive programs can include cash grants, tax credits, abatements, job training funds, bonds or low interest financing programs, hiring assistance, site and infrastructure assistance, utility savings, and other direct and indirect benefits. One common pitfall that companies make is allowing incentives to drive the location decision. Remember that incentives can’t offset the impact of selecting a bad location. If the location is not optimal for the operation, it will not be a good investment in the long run. Instead, let incentives help close the deal once a short list of qualified locations has been identified. Leveraging the competitive site selection process will maximize the incentive negotiation process. To ensure that the negotiated incentives are realized, a plan for ongoing compliance administration will be required.
Managing Director for Austin Consulting